Electric car manufacturer Tesla announced that it delivered a record number of vehicles in the second quarter of the year, driven by price reductions aimed at boosting sales. The company has lowered prices in key markets such as the US, UK, and China to compete with rival manufacturers. In response, major Chinese carmakers also reported a surge in sales for the month of June.
Tesla’s decision to pursue higher sales volume, even at the expense of lower profits, appears to have paid off. The company reported delivering 466,140 vehicles in the second quarter, representing an increase of over 80% compared to the same period last year. During the same timeframe, Tesla also ramped up vehicle production to nearly 480,000 units.
Bill Russo, the founder and CEO of advisory firm Automobility, described Tesla’s strategic choice to be a volume manufacturer as the primary driver behind the sales increase. The price reductions notably benefited Tesla’s higher-volume models, the Model 3 and Model Y, which gained an advantage in the competitive market.
The price cuts implemented by Tesla in China, its second-largest market, were particularly successful. Dan Ives from investment firm Wedbush Securities described these reductions as a smart move that yielded significant results for the company. Tesla faces stiff competition from local electric car manufacturers in China, and the price adjustments helped bolster its position.
Other Chinese automakers also experienced impressive sales growth in June. Beijing-based Li-Auto achieved an all-time high of 32,575 deliveries, marking its third consecutive monthly sales record. Additionally, Shanghai-based Nio and Guangzhou-based Xpeng saw their deliveries rise to 10,707 and 8,620 units, respectively.
Tesla has faced increased competition and the impact of higher borrowing costs in various markets. To address these challenges, the company has implemented price reductions throughout the year. Elon Musk, CEO of Tesla, stated on Twitter in April that the aim was to enable affordability at scale rather than starting a price war.
While these price cuts have affected Tesla’s profitability, with a 24% drop in profits for the first quarter due to higher costs and reduced prices, the company’s overall revenue increased by nearly a quarter during the same period.
Tesla is scheduled to release its financial results for the second quarter on July 19, providing further insight into its performance and market outlook.
Source: BBC
